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General Mills is set to acquire Tyson Foods' pet treat sector for $1.2 billion in cash. They'll become the owner of popular treats like Top Chews, Nudges, an True Chews. General Mills CEO Jeff Harmening said, "This acquisition advances our Accelerate strategy and further reshapes our portfolio for growth by adding an attractive business to our fast-growing Pet platform. Today’s announcement reinforces our commitment to using all capital allocation levers – including investment in the business, dividend growth, strategic acquisitions, and share repurchases – to drive top-tier shareholder returns over the long term.”
Harmening has been in pursuit of the pet industry, and has been able to pick up speed due to the increase in pet adoptions through the pandemic. In 2018, Harmening bought the natural pet food brand Blue Buffalo, a giant industry, for $8 billion. Blue Buffalo's sales surged 13% under Harmening's ownership. Blue Buffalo's popularity is reflective of pet owners' push toward healthier and more wholesome diets for their pets. "We think the acquisition of premium natural meat treats brands will make a good addition to the General Mills portfolio in the fast-growing treats category where Blue [Buffalo] was underperforming," said Guggenheim Securities analyst Laurent Grandet.
General Mills' pet sector profits increased 22% from last year, bringing in $311.9 million. Pet owners have been more honed in to their pets' needs than ever through the pandemic, and moving toward fresher ingredients and higher quality. The purchase of Tysons' treats will arguably do good for the overall value of the General Mills brand.